OBG talks to Manu Chandaria, Chairman, Comcraft Group

Interview: Manu Chandaria

What can be done to improve regional integration in the East African Community (EAC)?

MANU CHANDARIA: People have realised that there are inevitable problems to integration and have therefore accepted the current cooling-off period. However, no one is saying that integration can not go any further. Kenya, Uganda and Rwanda came together to announce some common policies, which have helped generate momentum. This has had an impact in those three countries, while Tanzania and Burundi have come to perceive this as an opportunity and to feel a sense of responsibility to accelerate integration.

For faster integration, the EAC requires cross-border trade. Border areas need to be developed to facilitate trade. A lot of work has already been done on cross-border trade, with the support of many multilateral and bilateral agencies. The only way we will see a breakthrough though is if cross-border trade continues to gather pace. The EAC must pay attention to this. Transportation in particular is a huge industry and a backbone of East African integration. Kenya and Tanzania, with their coastlines, have an ethical responsibility to ensure that goods reach the landlocked countries, i.e. Uganda, Burundi and Rwanda, at a reasonable cost.

How can the government help small and medium-sized enterprises (SMEs) compete on a larger scale across the manufacturing sector?

CHANDARIA: There are approximately 6m young people, including secondary school and polytechnic students and university graduates, without work in Kenya. No government – nor the private sector, for that matter – can create jobs on this scale, especially with 500,000 people entering the workforce every year.

Kenyan youth already have the basic skills. Meanwhile, the government has provided funding support to SMEs through the Uwezo Fund, the Youth Enterprise Development Fund and the Women Enterprise Fund. The government has also helped to create a market for SMEs by announcing that 25% of the goods procured by the state should be bought solely from SMEs. Now, the missing piece in this equation is for us to make room in the marketplace for SMEs. Only after you have created room for entrepreneurs will you find individuals who can produce and provide goods to the government. There has been a lot of talk about this without taking significant steps forward; for example, it took 10 years to get an SME law passed. India, Malaysia, Vietnam, Thailand and China are booming due to small producers adopting a sense of responsibility and seizing the initiative. The intentions of the government in this field are good, but intentions alone do not yield results.

Devolution will encourage investment to spread to new regions. Every county is now competing for investment, with counties such as Machakos at the forefront of this drive. In 2013, it took a long time for the government to settle and that year’s budget was problematic. However, I expect that in 2014 we will see a positive change in the general outlook.

What challenges lie ahead in achieving Kenya’s Vision 2030 goals for employment?

CHANDARIA: Unless the right environment is created in which small businesses can flourish, the 2030 targets will not be achieved. For example, suppose I know how to assemble an item for sale. If there are no suitable suppliers to provide me with quality materials, then my product will not be competitive compared to what is imported from abroad. Unfortunately the country does not view its reliance on imported goods as the result of exporting our youths’ jobs overseas.

I believe that the employment target laid out in Vision 2030 can be reached, but this will need a collective understanding of all the facets of job creation. Kenya is ahead of its neighbours in this regard. For instance, a new business incubation centre has been created at Kenyatta University, where students have advanced facilities to prepare themselves for entrepreneurship, to become employers rather than employees. But this alone is not enough; we need a hundred such centres.